Looking west from the boardroom in our office, you can just see it: an enormous pit, perhaps 200 feet deep, where the crowning glory of Vancouver's skyline would have been.

Designed by the late, great Arthur Erickson, the Ritz-Carlton's 123 luxury residences would surely have been one of the most prestigious addresses in the city. Fully 58 storeys high, the tower featured a dramatic 45-degree twist from foundation to apex, with spectacular views of the city, the Strait of Georgia and the North Shore mountains.

At least, that was the idea. When the global financial crisis hit last fall, the Ritz-Carlton was one of the casualties. Faced with sky-high construction costs, uncertain financing and sluggish sales, the developer halted the project in October. Recently, there's been some buzz about things starting up again after the 2010 Olympics. Until then, it serves as a poignant reminder of the depth of the global financial crisis.

A time to buy?

I asked Ross McCredie about the project when we met for a working lunch late last week. As president and CEO of Sotheby's International Realty Canada, and a 10-year veteran of the industry, he knows full well how tough times have been for anyone buying or selling luxury real estate in Canada. "It was incredible how quickly the market dried up," Mr. McCredie said, shaking his head. "From October of 2008 to the spring of this year, across the country, sales literally stopped."

Since then, however, it's been a different story. "I was surprised at how quickly the market picked up this past spring," he said. "[In Vancouver,] we've sold one home well over $10-million, one at $9.5-million, as well as two in Victoria at $6.8-million and $6.5-million, all in the last six weeks."

Why the dramatic change? Mr. McCredie believes it has everything to do with the psychology of the sellers. "The past year has cut deep into the mindset of many high-net-worth individuals and their families," Mr. McCredie said. "[Many] have decided to dispose of properties they thought they would never sell."

If you're a buyer, this is the kind of mentality you've been waiting for. "In the urban centres, properties over $3-million have a limited number of buyers, and they're taking a great deal more time to sell," Mr. McCredie said. "Often, sellers feel as if they 'missed the market,' and they're panicking somewhat."

If it's a recreational property you're shopping for, the news is equally good.

"Across Canada there are rare opportunities to purchase one-of-a-kind properties at well below assessed values - and often well below replacement cost," Mr. McCredie said. "This is especially true in the recreational markets such as Whistler, waterfront homes in the Okanagan, Muskoka and Mont Tremblant."

Advice for buyers and sellers

Despite his optimism, Mr. McCredie is quick to point out that luxury real estate is far from a "slam dunk," even in this market.

Certainly, great deals are out there, but the rules of real estate still apply: "Location is still the No. 1 driver of value in the upper end of the market," Mr. McCredie said.

At the same time, he points out that buyers are looking for more than just a pretty view.

"The architectural significance of the home is becoming more important. Size has little to do with value, but the actual beauty, quality of construction, and function of a home are key components of establishing a home's value."

Mr. McCredie believes that when it comes to luxury real estate, both buyers and sellers need to think carefully about the investment aspect of their purchase.

"Whenever buying or selling any home - and especially the most expensive home on the block - think about who else would buy it," he said.

As Mr. McCredie points out, building your dream home is all well and good, but your dreams aren't necessarily the same as a potential buyer's.

"People often get carried away building a trophy home for themselves without ever considering the basic fundamentals of real estate," he says.

"As a result, they overbuild for a particular lot or neighbourhood."

As Mr. McCredie candidly explained, such a move is rarely a wise investment decision. "It's a very simple supply-and-demand function," Mr. McCredie said.

"If there are multiple high-net-worth individuals who would want the home, then its value can easily exceed the current market."

As our server brought us the bill, I asked Mr. McCredie where he thinks the luxury market in Canada is headed over the next year.

He reminded me that when it comes to luxury real estate, the market is only one factor in the equation.

"Done poorly, you can sell a home well short of its value. Done well, you can overcome nearly any market."

Thane Stenner is founder of Stenner Investment Partners within GMP Private Client L.P., as well as Managing Director, Private Client. He is also bestselling author of ´True Wealth: an expert guide for high-net-worth individuals (and their advisors). He can be reached at thane.stenner@gmppc.com. The opinions expressed in this article are the opinions of the author and readers should not assume they reflect the opinions or recommendations of GMP Private Client L.P. or its affiliates.

Bentall 5 building has been sold to a German investment company for $300 million in Vancouver, B.C.

Photograph by: Bill Keay, Vancouver Sun

VANCOUVER - News that the Bentall 5 building in downtown Vancouver had been sold to a German investment firm for $300 million dropped like a bombshell in the city's commercial real estate sector Wednesday morning.

It is the highest price paid for a single building in Metro Vancouver in at least the past decade and the second highest in Canada since the end of 2007.

"For sure it's the largest [sale] in Canada this year," said Tony Quattrin, an executive vice-president in Vancouver for the commercial realtor CB Richard Ellis, Deka Immobilien's broker in the deal.

The Bentall 5 sale ranks as the biggest transaction Metro Vancouver has seen for the decade Paul Richter has been researching the market.

"[The sale] is a bit of a surprise in that you don't see deals anywhere near this [magnitude] generally in this market," said Richter, western Canadian manager for the property research firm RealNet Canada Inc.

He said in an interview that he fielded several e-mails Wednesday morning that included a lot of multiple exclamation points in their punctuation.

"Something coming in at $300 million has caught a lot of people's attention," he said.

The surprise, however, is "tempered a little bit when you think about the property and how high-end it is and how tight the office market is," Richter said. "It's just a gem in the office market."

Located at 550 Burrard downtown, the 33-storey, 583,000-square-foot tower was built by Bentall Properties LP, which is owned in part by SITQ, in two phases. The first opened in 2002, the second in 2007.

The sale comes at the same time tight credit conditions have dampened commercial real estate purchases and the news from U.S. markets is about foreclosures on major assets.

Avtar Bains, senior vice-president at Colliers International, said the fact that Deka Immobilien found an owner in Vancouver willing to sell was the startling part.

"What's somewhat surprising is that it is rare that opportunities like this come up in downtown Vancouver," Bains said in an interview.

Quattrin said the Bentall 5 building is Deka Immobilien's first purchase in Canada. He said the purchase speaks to the confidence the firm has in the Canadian market, which is surviving the recession better than other locations in the world.

Quattrin said Deka Immobilien, one of two open-ended property investment funds controlled by the 19-billion euro DekaBank Group, moved quickly when it decided to invest in Vancouver. He said the firm sent an advance team to scout the city last October.

The deal to buy Bentall 5, Quattrin added, was put together over the past 60 days.

Tony Astles, senior vice-president at Bentall Real Estate Services, said Deka Immobilien will retain Bentall as manager of the building.

Please excuse the mess while I upgrade my website. In the meantime, you may access all my blog posts by clicking here.

Please excuse the mess while I upgrade my website to provide you with even more timely and topical information on our market and the process of buying and selling. In the meantime, you can access my blog by clicking here